M/s. Vibhuti Organisers Pvt. Ltd., Surat V. The ACIT, Central Circl-1, Surat

CO 259/AHD/2014

• Counselvise Citation: [2018] 117 COUNSELVISE.COM (IT) 2441 (ITAT-SURAT)
• Duration Of Justice: 4 year(s) 1 month(s) 14 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-10-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 09-03-2017
• Assessment Year: 2011-2012
• Appeal Filed On: 15-09-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: MRS URVASHI SHODHAN
• Keywords: Income from undisclosed sources; Search and seizure; Set aside
• Section: 153A; 27; 132

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL, SURAT BENCH, SURAT , , BEFORE SHRI C.M.GARG, JUDICIAL MEMBER AND SHRI O.P.MEENA, ACCOUNTANT MEMBER . / ITA NO.2089/AHD/2014/SRT & C.O. NO.259/AHD/2014/SRT / ASSESSMENT YEAR: 2011-12 ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1, SURAT. VS. M/S. VIBHUTI ORGANISERS PVT. LTD., F.P NO.10/11, R. S NO.15-1A, SWASTIK UNIVERSAL, NR. VALENTINE CINEMA, PIPLOD, SURAT 395 001. [PAN: AACCV 6786F] ( / APPELLANT) ( !' /RESPONDENT/CROSS OBJECTOR) / APPELLANT BY : MRS. URVASHI SHODHAN, A.R /RESPONDENT BY : SHRI DILEEP KUMAR, SR. D.R /DATE OF HEARING : 12-10-2018 / DATE OF PRONOUNCEMENT : 29-10-2018 / ORDER PER C.M.GARG, JUDICIAL MEMBER: THIS APPEAL HAS BEEN FILED BY THE REVENUE AND THE CROSS OBJECTION (CO) HAS BEEN FILED BY THE ASSESSEE AGAIN ST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, AHMEDABAD (CIT(A) FOR SHORT) DATED 28.04.2014 FOR THE ASSESSMENT YEAR (A. Y) 2011-12. 2 ITA NO.2089/AHD/2014/SRT & C.O NO.259/AHD/2014/SRT (A.Y: 2011-12) M/S. VIBHUTI ORGANISERS PVT. LTD. 2. THE GROUNDS RAISED BY THE REVENUE READ AS FOLLOWS: 1. THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN D ELETING THE PENALTY OF RS.92,90,000/- IMPOSED UNDER SECTION 271AAA OF THE I.T ACT, 1961, IGNORING THE FACT THAT THE ASSESSEE HAS NOT S ATISFIED THE CONDITIONS LAID DOWN IN SECTION 271AAA(2)(II) AND 271AAA(2)(III) OF THE ACT. 2. THE LD. CIT(A) HAS NOT APPRECIATED THAT SECTION 271AAA(2) CASTS THE ONUS ON THE ASSESSEE TO ADMIT, SPECIFY AND SUBS TANTIATE THE UNDISCLOSED INCOME AND PAY TAX AND INTEREST THEREON . THE INCOME TAX ACT DOES NOT CAST THE ONUS ON THE ASSESSING OFF ICER TO ESTABLISH THE SOURCE OF UNACCOUNTED INCOME. 3. THE CROSS OBJECTIONS OF THE ASSESSEE READ AS FOL LOWS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE THE L D. CIT(A) HAS RIGHTLY DELETED THE PENALTY OF RS. 92,90,000/-IMPOS ED UNDER SEC. 271AAA OF THE I.T ACT, 1961. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW THE ORDER OF THE LD. AO IS NOT ENTITLED TO BE RESTORED. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH SIDES AND CA REFULLY PERUSED THE RELEVANT MATERIAL PLACED ON THE RECORD OF THE T RIBUNAL. THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUBMITTED THAT THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE PENALTY O F RS.92,90,000/- IMPOSED UNDER SECTION 271AAA OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'), IGNORING THE FACT THAT THE ASSESSEE HAS NOT SATISFIED THE CONDITIONS LAID DOWN IN SECTION 271AAA(2)(II) AND 271AAA(2)(III) OF THE ACT. HE FURTHER SUBMITTED THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN IGNORING THE IMPORTANT FACT THAT SECTION 271AAA(2) CASTS THE ONUS ON THE ASSESSEE TO ADMIT, SPECIFY AND SUBSTANTIATE THE UNDISCLOSED INCOME AND PAY TAX AND INTEREST THEREON. THE INCOME TAX AC T DOES NOT CAST THE 3 ITA NO.2089/AHD/2014/SRT & C.O NO.259/AHD/2014/SRT (A.Y: 2011-12) M/S. VIBHUTI ORGANISERS PVT. LTD. ONUS ON THE ASSESSING OFFICER TO ESTABLISH THE SOUR CE OF UNACCOUNTED INCOME. THE LD. DR LASTLY SUBMITTED THAT THE LD. CI T(A) HAS GRANTED RELIEF TO THE ASSESSEE WITHOUT ANY BASIS THEREFORE, THE IMPUGNED ORDER MAY KINDLY BE SET ASIDE BY RESTORING THAT OF THE AO . 4. REPLYING TO THE ABOVE, THE LD. ASSESSEES REPRES ENTATIVE (AR) STRONGLY SUPPORTED THE FIRST APPELLATE ORDER AND DR EW OUR ATTENTION TOWARDS RELEVANT PARAS 6.1 TO 6.5 OF THE FIRST APPE LLATE ORDER. THE LD. AR SUBMITTED THAT THE LD. CIT(A) WAS RIGHT IN GRANTING RELIEF TO THE ASSESSEE AFTER CONSIDERING ENTIRE FACTS AND CIRCUMSTANCES OF THE CASE AND BY FOLLOWING THE RATIO OF THE DECISION OF HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. MAHENDRA C. SHAH REPORTED IN 99 ITR 305 (GU J.) AND HENCE, FIRST APPELLATE ORDER MAY KINDLY BE UPHELD B Y DISMISSING APPEAL OF THE REVENUE. 5. ON CAREFUL CONSIDERATION OF ABOVE RIVAL SUBMISSI ONS, FIRS OF ALL, WE MAY POINT OUT THAT THE LD. CIT(A) HAS GRANTED RELIE F TO THE ASSESSEE WITH FOLLOWING OBSERVATIONS AND FINDINGS. 6.1 THE PENALTY U/S.271AAA OF THE ACT WAS INITIATE D BY THE ASSESSING OFFICER WHICH AS BEEN LEVIED ALSO ON THE GROUND THAT THE APPELLANT COMPANY NEITHER DURING THE ASSESSMENT PRO CEEDINGS, NOR DURING THE PENALTY PROCEEDINGS, HAS SPECIFIED THE M ANNER IN WHICH SUCH UNDISCLOSED INCOME DECLARED DURING THE SEARCH, WAS DERIVED AND THE CONDITION OF SECTION.271AA(2)(I), IS PARTLY SATISFIED. MOREOVER, THE APPELLANT HAS ALSO NOT SUBSTANTIATED THE MANNER IN WHICH THE DISCLOSED INCOME HAS BEEN DERIVED AT BY ANY SUPPORT ING PROOF OR DOCUMENTARY EVIDENCE. THE-CONDITION -OF PAYMENT OF TAX ON 'ADDITIONAL INCOME OFFERED, THOUGH HAS BEEN COMPLIE D WITH, YET THE 4 ITA NO.2089/AHD/2014/SRT & C.O NO.259/AHD/2014/SRT (A.Y: 2011-12) M/S. VIBHUTI ORGANISERS PVT. LTD. ASSESSING OFFICER HAS LEVIED THE PENALTY AS ACCORDI NG TO HIM, ALL THE CONDITIONS OF SECTION 271AAA(2) OF THE ACT WERE NOT FULFILLED. 6.2 ON THE OTHER HAND, THE LEARNED A.R. ON BEHALF O F THE APPELLANT COMPANY, HAS SUBMITTED THAT DURING THE COURSE OF SE ARCH U/S.132 AT THE OFFICE PREMISES OF THE APPELLANT, A SMALL NOTE BOOK WAS SEIZED WHICH WAS INVENTORISED AS ANNEXURE BS-2 OF THE PANC HNAMA AND LATE SHRI PRAJAPATI ON BEING CONFRONTED WITH THE CO NTENTS OF THE SAID NOTE BOOK, ADMITTED THAT THE ENTRIES IN THE NOTE BO OK ARE RELATED TO DATE-WISE, & CONCERN-WISE DETAILS OF UNACCOUNTED MO NEY RECEIVED BY DIFFERENT CONCERNS OF THE APPELLANT GROUP. IT WAS A LSO ADMITTED THAT AGGREGATE SUM OF RS.23.69 CRORES ON BEHALF OF THE A PPELLANT GROUP AND RS.9.29 CRORE IN PARTICULAR IN THE CASE OF THE APPELLANT GO., REPRESENTS UNACCOUNTED AND UNEXPLAINED NET INCOME E ARNED OUTSIDE THE BOOKS OF ACCOUNTS OF THE CONCERNS. ACCORDING TO THE LEARNED A.R., THE CONDITIONS OF SECTION 271AAA ARE FULFILLED HENC E, THERE WAS NOT CAUSE FOR PENALTY. THE A.R. HAS RELIED UPON TANY CO URT DECISIONS MENTIONED SUPRA.ON CAREFUL CONSIDERATION OF THE FAC TS, IT IS SEEN THAT THE DISCLOSURE WAS MADE BY THE APPELLANT U/S.132(4) OF THE ACT OF RS.9.29 CRORES AS UNDISCLOSED INCOME OF THE APPELLA NT COMPANY EARNED OUTSIDE THE BOOKS DURING A.Y. IN QUESTION. T HE MANNER OF EARNING SUCH INCOME HAS BEEN CLEARLY STATED AS DERI VED FROM THE CONSTRUCTION BUSINESS OF THE APPELLANT COMPANY WHIC H WAS RUN IN THE NAME OF 'SWASTIK UNIVERSAL', WHICH WAS A RESIDENTIA L COMPLEX. THE CONDITION ENVISAGED IN SUB SECTION (I) OF SECTION 2 71AAA(2) IS SATISFIED BECAUSE THE MANNER OF EARNING UNDISCLOSED INCOME HAS BEEN CLEARLY STATED. 6.3 AS REGARDS SUB SECTION (II) OF SECTION 271AAA(2) OF THE ACT, IT IS SEEN THAT THE UNDISCLOSED INCOME DECLARED DURING THE SEARCH, IS BASED ON THE NOTES IN THE DIARY/NOTE BOOK MARKED AS ANNEXURE BS-2 WHICH CLEARLY MENTIONS THE DATE-WISE RECEIPTS OF 'O N MONEY' OR 'UNACCOUNTED RECEIPTS' IN THE NAME OF THE APPELLANT COMPANY AS WELL AS IN THE NAME OF THE OTHER CONCERNS OF THE APPELLA NT GROUP. IT IS SEEN THAT ON DIFFERENT PAGES OF THE SAME NOTE BOOK, THER E IS CLEAR MENTION OF THE DATE/MONTH AND UNACCOUNTED INCOME RECEIVED D URING THE SAID PERIOD AND THE APPELLANT HAS OFFERED THE TOTAL OF S UCH UNACCOUNTED INCOME EARNED DURING THE A.Y. UNDER QUESTION I.E. R S.9.29 CRORES WHICH IS DECLARED U/S.132(4) OF THE ACT. THUS, IN M Y CONSIDERED VIEW, THIS CONDITION ALSO IS SATISFIED. 6.4 THE LEARNED A.R. HAS RELIED ON MANY COURT DECISIONS SUCH AS - I) CIT VS. MAHENDRA C. SHAH {99 ITR 305) (GUJ). II) SULOCHANA A AGRAWAL VS. I. T. DEPT., ITAT NO.1052/A HD/2012 (ITAT AHMEDABAD) III) CIT VS. SHRI RADHA KISHAN GOEL 271 ITR 454 (ALLAHAB AD) IV) SHRI PRAMODKUMAR JAIN VS. DCIT ITA NO. 131, 132, 133/CPK/2012 ITAT CUTTACK BENCH, CUTTACK. IT HAS BEEN HELD BY THE HON'BLE COURTS IN THESE DEC ISIONS MENTIONED ABOVE THAT THE ASSESSING OFFICER HAS TO SPECIFICALL Y ASK THE ASSESSEE 5 ITA NO.2089/AHD/2014/SRT & C.O NO.259/AHD/2014/SRT (A.Y: 2011-12) M/S. VIBHUTI ORGANISERS PVT. LTD. TO EXPLAIN THE MANNER IN WHICH THE UNDISCLOSED INCO ME HAS BEEN DERIVED AND IF HE HAS NOT DONE SO, THE ASSESSEE CAN NOT BE PENALIZED, IF SUO-MOTO HE, BY ENLARGE, EXPLAINS THE MANNER OF EARNING THE UNDISCLOSED INCOME AND PAYS THE TAXES THEREON. IT I S ALSO SEEN THAT THOUGH THE JUDGEMENT IN THE CASE OF CIT VS. MAHENDR A C.SHAH (99 ITR 305), WAS DELIVERED IN CONTEXT OF PENALTY U/S.2 71(1)(C) OF THE ACT, BUT THE CONTENTS ARE PERAMETERIA TO THE CONDITIONS OF SECTION 271AAA OF THE ACT AND FOLLOWING THAT DECISION, MANY COURTS HAVE GIVEN THE DECISION IN FAVOUR OF THE APPELLANT HOLDING THAT TH E PENALTY U/S.271AAA UNDER SUCH CIRCUMSTANCES SHOULD NOT BE L EVIED. THE RELIANCE IS PLACED ON THE FOLLOWING JUDGEMENTS ALSO :- I. MOTHERS PRIDE EDUCATION PERSONNA.. VS DCITITA NO . 3372/DEL/2011 II. SMT RAJA RANI GUPTA VS DCIT CC-5, NEW DELHI ITA NO. 3371/DEL/2011 III. ASHOKKUMAR SHARMA VS DCIT CIRC!E2(1), SAMBALKP UR ITA NOS. 476 TO 480/CT/2011 IV. PANNALAL K BANTHIA VS DEPARTMENT OF INCOME TAX ITA NO. 6145/MUM/2010 V. ACIT VS BHIKHUBHAI SHAH ITA NO. 1816/AHD/2010 TAKING INTO ACCOUNT, THE ENTIRE FACTS AND THE CIRCU MSTANCES OF THE CASE AND THE LEGAL POSITION AS CITED ABOVE, I AM OF THE CONSIDERED VIEW THAT THE ASSESSING, OFFICER WAS NOT JUSTIFIED IN LEVYING PENALTY U/S.271AAA OF THE ACT AS THE CONDITIONS OF SECTION 271 AAA(2) WERE FULFILLED, THE PENALTY IS LIABLE TO BE DELETED. THE APPELLANT GETS RELIEF ACCORDINGLY. 6. IN VIEW OF FINDINGS RECORDED BY THE AO IN THE PE NALTY ORDER AND CONCLUSION DRAWN BY THE LD. CIT(A) IN THE FIRST APP ELLATE ORDER, AS REPRODUCED HEREIN ABOVE, WE OBSERVE THAT ADMITTEDLY THE APPELLANT HAS OFFERED THE TOTAL OF UNACCOUNTED INCOME OF RS. 9.29 CRORES FOR AY 2011- 12 IN THE STATEMENT RECORDED DURING THE SEARCH AND SEIZURE OPERATION U/S. 132(4) OF THE ACT. THIS DECLARATION/SURRENDER WAS BASED ON THE NOTES IN THE DIARY/NOTE BOOK MARKET AS ANNEXURE-BS- 2 WHICH CLEARLY MENTIONS THE DATE-WISE RECEIPTS OF ON MONEY OR U NACCOUNTED RECEIPTS IN THE NAME OF THE APPELLANT COMPANY AS WELL AS IN THE NAME OF THE 6 ITA NO.2089/AHD/2014/SRT & C.O NO.259/AHD/2014/SRT (A.Y: 2011-12) M/S. VIBHUTI ORGANISERS PVT. LTD. OTHER CONCERNS OF THE APPELLANT GROUP. FROM THE NO TINGS ON THE PAGES OF SAID DIARY/NOTE BOOK ANNEXURE-BS-2 THERE WAS CLE AR MENTIONING OF THE DATE/MONTHS AND UNACCOUNTED INCOME RECEIVED BY THE ASSESSEE DURING THE SAID PERIOD, WHICH WAS OFFERED TO TAX DU RING STATEMENT U/S. 132 OF THE ACT. 7. FROM THE COPY OF THE STATEMENT OF SHRI KARSHANBH AI M. PRJAPATI RECORDED U/S. 132(4) OF THE ACT (ASSESSEE PAPER BOO K PAGE 1-3), WE OBSERVE THAT REPLYING TO Q. NOS.5, 6 & 7, THE ASSES SEE CLEARLY STATED THE MANNER OF EARNING SUCH UNDISCLOSED INCOME OF RS . 9.29 CRORES AS DERIVED FROM CONSTRUCTION BUSINESS OF THE APPELLANT COMPANY IN THE PROJECTS NAMELY SWASTIK UNIVERSAL, WHICH WAS A RE SIDENTIAL COMPLEX. THEN, THE CONDITION PROVIDED IN SUB S. (I) OF S. 27 1AAA(2) OF THE ACT IS SATISFIED AS THE MANNER OF EARNING OF UNDISCLOSED I NCOME HAS BEEN CLEARLY STATED BY THE ASSESSEE IN THE STATEMENT O F DIRECTOR OF ASSESSEE COMPANY RECORDED U/S. 132(4) OF THE ACT. IT IS ALS O NOT IN DISPUTE THAT THE ASSESSEE HAS SHOWN SURRENDERED INCOME IN THE RE TURN FILED IN RESPONSE TO NOTICE U/S. 153A OF THE ACT AND HAS PAI D ALL DUE TAXES ETC. THEREON AND THUS, ANOTHER REQUIRED CONDITION HAS AL SO BEEN FULFILLED BY THE ASSESSEE. 8. NOW, WE FURTHER EVALUATE THE CONCLUSION OF THE L D. CIT(A), WHEREIN HE HAS RELIED ON THE RATIO OF THE DECISION OF DECIS ION HONBLE 7 ITA NO.2089/AHD/2014/SRT & C.O NO.259/AHD/2014/SRT (A.Y: 2011-12) M/S. VIBHUTI ORGANISERS PVT. LTD. JURISDICTIONAL HIGH COURT IN THE CASE OF MAHENDRA C . SHAH (SUPRA) AND DECISION OF HON'BLE HIGH COURT OF ALLAHABAD IN THE CASE OF CIT VS. SHRI RADHA KISHAN GOEL (SUPRA) AND OTHER TWO ORDERS OF I TAT IN THE CASE OF SULOCHANA A AGARWAL (SUPRA) & SHRI PRAMODKUMAR JAIN (SUPRA). IN THE CASE OF MAHENDRA C. SHAH (SUPRA), THEIR LORDSHIP SP EAKING FOR THE JURISDICTIONAL HIGH COURT HELD THAT THE AO HAS TO S PECIFICALLY ASK THE ASSESSEE TO EXPLAIN THE MANNER IN WHICH THE UNDISCL OSED INCOME HAS BEEN DERIVED AND IF HE HAS NOT DONE SO, THE ASSESSE E CANNOT BE PENALIZED, IF SUO-MOTO HE, BY ENLARGE, EXPLAINS THE MANNER OF EARNING THE UNDISCLOSED INCOME AND PAYS THE TAXES THEREON. IN THESE CIRCUMSTANCES AND IN THE LIGHT OF RATIO OF THE DECI SION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF MAHENDRA C . SHAH (SUPRA), WHEN WE ANALYZE THE STATEMENT OF SHRI PRAJAPATI, A DIRECTOR OF THE COMPANY RECORDED U/S. 132 (4) OF THE ACT DURING SEA RCH AND SEIZURE OPERATION THAT NO QUESTION HAS BEEN ASKED TO THE AS SESSEE TO THE DIRECTOR OF THE COMPANY ASKING HIM TO COMPLY WITH T HE CONDITION (II) OF S. 271AAA OF THE ACT TO SUBSTANTIATES THE MANNER IN WHICH THE UNDISCLOSED INCOME WAS DERIVED. THEREFORE, RATIO O F THE DECISION OF HON'BLE HIGH COURT OF GUJARAT IN THE CASE OF MAHEND RA C. SHAH (SUPRA) AND RECENT DECISION DATED 14.09.2015 IN TAX APPEAL NO.565/2015 IN THE CASE OF PCIT VS. GEETA PRINTS PVT. LTD. (GUJ.) , AS VEHEMENTLY RELIED 8 ITA NO.2089/AHD/2014/SRT & C.O NO.259/AHD/2014/SRT (A.Y: 2011-12) M/S. VIBHUTI ORGANISERS PVT. LTD. BY THE LD. AR SUPPORTS THE CONTENTION AND EXPLANATI ON OF THE ASSESSEE AND RESPECTFULLY FOLLOWING THE SAME, WE DECLINE TO ACCEPT STAND AND OBSERVATIONS OF THE AO IN IMPOSING PENALTY U/S. 271 AAA OF THE ACT. AT THE SAME TIME, WE FURTHER OBSERVE THAT THE LD. CIT( A) WAS RIGHT IN CANCELLING THE PENALTY BY FOLLOWING DECISION OF HON BLE JURISDICTIONAL HIGH COURT AND HENCE, CONCLUSION DRAWN LD. FIRST AP PELLATE AUTHORITY IN THE IMPUGNED ORDER IS UPHELD. CONSEQUENTLY, GROUNDS OF REVENUE BEING DEVOID OF MERITS ARE DISMISSED. 9. THE LD. AR SUBMITTED THAT THE ASSESSEE HAS FILED C.O TO SUPPORT CONCLUSION DRAWN BY THE LD. CIT(A) AND THE SAME DOE S NOT WANT TO PRESS THE SAME HENCE, THE SAME ARE DISMISSED AS NOT PRESSED. 10. IN THE RESULT, THE APPEAL OF THE REVENUE AS WEL L AS THE C.O OF THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 2 9 TH OCTOBER, 2018. / SURAT ; DATED : 29 TH OCTOBER, 2018 / EDN ! $ / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APPELLANT ; 2. / THE RESPONDENT ; 3. # ( ) / THE CONCERNED CIT(A); 4. THE CONCERNED PRL. CIT; 5. , , , / DR, ITAT, SURAT; 6. / GUARD FILE . // TRUE COPY // SD/- SD/- ( ) ( O.P.MEENA ) / ACCOUNTANT MEMBER ( ) (C.M.GARG) /JUDICIAL MEMBER